The Federal Student Loan Program Was Supposed To Pay for Itself. Now, It’ll Cost Taxpayers $197 Billion

A new report from the Government Accountability Office found that the Federal Student Loan Program will cost over $300 billion more than originally predicted.

The Federal Student Loan Program is often criticized as a source of revenue for the federal government. But a new report from the Government Accountability Office (GAO) shows that the present situation can’t be further from the truth.

When the Federal Direct Student Loan Program began in 1994, the Department of Education estimated that it would generate $114 billion in revenue for the federal government. Almost 30 years later, the program is estimated to cost the government $197 billion, a staggering difference of over $300 billion. The Federal Student Loan Program has failed, and the cost of its failures will be shouldered by the American public.

The largest contributor to the increased cost of the Direct Loan Program is the ongoing pause on student loan payments initiated during the COVID-19 pandemic. According to GAO, previous forms of government spending only increased the cost of the program by around $14 billion. COVID-19 relief, on the other hand, cost the government almost $108 billion in revenue. Even more concerning, the cost of the COVID-19 student loan pause is likely even higher, as the GAO did not include 2022 data in its estimates. – READ MORE